Glossary Of Home-Based Business Terms

Balance Sheet: A financial statement that summarizes what a business owns (assets), owes (liabilities) and the amount invested by the shareholders (shareholders equity) at a specific point in time.

Benchmarking: Measurement and comparison of your business performance against a yardstick, such as competitors, to enable the improvement of your business performance.

Blog: A contraction of the word “weblog”, it is a website with regular short informative articles or posts that are written in a conversational tone and are displayed in reverse chronological order (newest on top). It usually contains personal comments, views, opinions and experiences.

Blogging: The process of writing content for a blog post and publishing it or commenting on someone else’s blog.

Brand: The identity of a product or service, which differentiates it from its competitors.

Branding: The ongoing process of building a brand identity and communicating the brand’s desired benefit to consumers.

Break-even analysis: A useful tool to calculate the volume of production of products or services, at a given price, that will produce enough income to cover all costs (to break even).

Break-even point: The point where total revenue equals total costs.

Budget: An estimate of future expenses and income over a specific period of time.

Business: An occupation, profession or trade.

Business venture: A start-up enterprise which has some risk but is developed with the intent of financial gain.

Cash Flow Statement: A financial statement summarizing the actual and predicted cash inflow and cash outflow for its operating, investing and financial activities over a given period of time (monthly, quarterly or yearly).

Consumer: A person who buys goods and services for his or her own personal use.

Content Management System: A web application that makes it easy for nontechnical people to upload, edit and manage content on a website without needing to know any coding.

Corporation: A business organization with separate legal rights and liabilities to that of its owners. It protects the owners from personal liability.

Credit: The agreed funding facility which enables a borrower to obtain goods/services/money with a contractual agreement governing its repayment (buy now, pay later).

Customer: A person who buys (purchases) goods or services from another person or company.

TopDatabase: A collection of organized data (like an electronic filing system) that can be easily accessed, updated and managed.

Depreciation: A non-cash expense whereby the value of an asset is decreased over time (for age, wear and tear and loss of market value). Often referred to as “writing off”.

Direct cost: A cost that can be traced directly to a finished product or service, for example, the materials and labor in construction.

Domain Name Registrar: A company that provides a domain name registration service to the owner of a web domain to prevent others from acquiring the address. The registrar also provides a service that translates the domain’s IP address into an easily identifiable address and vice versa.

Employer Identification Number (EIN): Also known as Federal Employer Identification Number or Federal Tax Identification Number, it is a unique 9 digit code used to identify business entities for tax purposes. A business EIN serves the same purpose as a social security number for an individual.

Enterprise: An enterprise is another word for a business.

Entity: Something that exists as an independent legal body such as a person, partnership, organization or business.

Entrepreneur: Someone who identifies a need and has the skills and initiative to assume all the risk and turn an idea into a profitable enterprize.

Equity: The funds provided by investors in return for a share of the business (they become shareholders).

Etsy: A website where you can buy or sell handmade or vintage items.

FDA: US Food and Drug Administration (US Department of Health and Human Services)

Federal Trade Commission (FTC): The Federal Trade Commission aims to protect consumers by preventing fraud and unfair business practices and maintaining healthy competition by preventing anticompetitive mergers and business practices in the marketplace.

Fixed costs: Fixed costs or expenses do not vary with short term changes in production volume and are independent of business activity.

Franchise: A contractual agreement which allows an individual or group to operate under a franchisor’s trade name within a designated geographic area for a fee.

Franchisee:The person or entity that buys the rights to use a franchisor’s trade name and business model.

Franchisor: The entity which owns the legal rights and trademarks of the franchise business. It is the person or entity that grants franchisees the rights to use the rights and trade names.

Gross Profit Margin: The percentage of gross profit divided by sales. This will indicate how much is left to cover operating costs and possible profit.

HTML: Short for HyperText Markup Language, it is the coding used for formatting and displaying documents on the World Wide Web (www).

Income Statement:Also known as the Profit and Loss Statement, it is a financial statement showing a summary of revenues and expenses resulting in a profit or loss for a given period of time (month, quarter or year).

Internet Service Provider (ISP): A company or organization that provides personal and business access to the Internet for a monthly fee.

Inventory: A complete list of all the business’s stock or merchandise on hand, raw materials and finished and unfinished products that are unsold.

Liability Insurance: An insurance policy that provides protection from the risk of claims arising from injury, negligence or damage to other people or property.

Limited Liability Company (LLC): A business structure, allowed by state statute, with a separate legal entity and in which the owners (members) have no personal liability for the business debts. Each state may use different regulations for a limited liability company.

Liquidity: The ability to convert assets into cash with no or minimal loss of value.

Marketing: The process of identifying the unfullfilled needs and desires of a target market, then creating, delivering and communicating products or services to satisfy those needs and desires and build relationships between brands and consumers.

Marketing Mix: A combination of the elements of marketing to formulate a specific marketing strategy.

Markup: The amount added by a seller to the cost price of a product or service to calculate the selling price.

Medical billing: The process used by health care providers to submit claims to insurance companies for services rendered to a patient.

Money laundering: The process used by criminals to transform illegally obtained funds into seemingly legitimate funds that cannot be traced back to their criminal activities.

Multilevel marketing (MLM): A strategy or sales system used by some direct sales companies whereby their sales people (distributors) receive commission from their personal sales plus a percentage of the sales generated by people they recruited to work for the company.

Net Profit Margin: Net income (gross income less allowable expenses and tax) divided by revenue.

Networking: In business, it is the process of establishing mutually beneficial relationships to increase business performance.

Operating Profit Margin: Operating profit (the profit arising from core operations) divided by sales. It shows the efficiency of converting sales into profit from the businesses operations (rather than other sources of income).

Paperless office: A working environment in which the use of paper has been either eliminated or greatly reduced to enhance productivity.

Partnership: An association of two or more people engaged in a business venture in which profits and losses are shared proportionally.

Plug-ins: Small add-on applications that allow the user to customise the functionality of larger application software.

Point of Sale (POS): The place where a customer makes a payment for goods or services (for example a checkout).

Prime Prospects: The sub-market within the target market that has the highest probability of buying your product or service.

Public Relations (PR): A strategic communication process to maintain and develop relationships between an organization and its customers, potential customers and key stakeholders.

Pyramid Scheme:An illegal moneymaking scheme (scam) in which new people are continually recruited to form the base of the pyramid. They are required to make payments to those who recruited them. They then recruit people below them, who are required to make payments to them. Eventually the scheme collapses because the people at the base of the pyramid are unable to recruit new participants. These people will then lose the money they paid to those who recruited them.

SBA: The US Small Business Administration (providing support to small businesses).

Scam: A deceptive, dishonest or fraudulent act or activity, often aimed at achieving a quick profit. A swindle that often relies on confidence trickery.

Search Engine: A computer program that indexes website content and delivers a list of webpages or documents in response to users entering a keyword or phrase.

Shareholder (Stockholder):An individual, organization, trust, or company that owns shares or stock in a corporation or company.

Sole Proprietor:A business entity owned and operated by a single individual and considered a single entity for legal and tax purposes.

Venture Capital: Funds provided by investors to start-up and small businesses with high risk but perceived long term high potential growth (and return on investment).

Virtual Assistant (VA): An independent contractor working from outside of the client’s office, who performs a variety of support tasks such as administrative, technical, financial, secretarial or creative tasks.

Web Hosting: The service provided by a web host (often an internet service provider) to maintain your website on its computer servers and provide your website with access to the internet.

WordPress: A free (open source) blogging and content management system that is used to create, format, customise and manage content for a website.

Zoning: In urban planning, zoning pertains to the division of geographic areas into zones, such as residential, commercial or industrial, and within which certain restrictions may apply.